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New Data Shows Residential Property Prices Are Still Climbing

New Data Shows Residential Property Prices Are Still Climbing

New Data Shows Residential Property Prices
Are Still Climbing

UK property prices are continuing to increase across all UK regions, according to the latest data published by the mortgage lender, Halifax.

The latest data gathered in a survey by the Halifax for February 2014, shows that residential property prices increased by 2.4% during the month, making average property prices 7.9% higher than they were in February 2013.

The growth in UK residential property prices over the last 12 months is the fastest annual pace of increase since October 2007 and means an average residential property in the UK now costs around £179,872 (GBP).

Residential house prices are increasing because of improving economic conditions in the UK and increased demand from frustrated buyers, encouraged by the Government’s Help-To-Buy scheme offering first-time and next-step buyers cheaper mortgages.

A recent poll of 27 economists and analysts by news agency, Reuters suggested that residential property prices could increase by another 7% this year, led by activity in the London property market.

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UK Property Prices Continue To Rise

UK Property Prices Continue To Rise

UK Property Prices Increased By 0.6% In August 2013

The latest House Price Index (HPI) published by UK building society and leading mortgage lender, Nationwide, reveals that UK property prices are continuing to increase at a steady and sustainable pace.

Data from the Nationwide HPI show that UK property prices are now 3.5% higher than they were in 2012 and 0.6% higher than they were in July 2013, making a typical residential property now worth around £170,514 (GBP).

The data also reveals that the annual rate of residential property price growth has slowed, down to 3.5% from the 3.9% observed last month, but economists had allowed for a drop in growth because of only having a low base for comparative purposes.

The quarterly measure of UK property prices has increased by 1.4%, showing that residential property prices are rising at their strongest pace for the last three years, which could promote fears of another property bubble.

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Average Residential Property will cost

 £267,000 by 2018

Average UK Residential Property Prices Increase

Average UK Residential Property Prices Increase

Average UK residential property prices for 2014

are estimated to be 2.3% higher than in 2007

Forecasts from the Centre for Economics and Business Research (CEBR) suggest that a typical residential property in the UK will cost an average of £227,000 (GBP) in 2014, overtaking the average peak price of residential property observed at the height of the housing bubble in 2007, for the first time.

The CEBR also predict that the average residential property price will be £222,000 (GBP) by the end of this year, 1.4% higher than average property prices reached in 2012.

By 2018, the CEBR expect the cost of a typical residential property in the UK to average £267,000 (GBP).

In 2014, the CEBR estimate that the Government’s Help-to-Buy scheme could raise UK property prices by up to 0.8% without having any appreciable impact on the current housing supply.

However, if the upward trend in residential property prices continues, it could lead to an additional 4,800 residential properties being built in 2015.

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The number of owner-occupied households has continued to fall, according to the latest English Housing Survey.

The EHS 2010/11 survey says there were 14.45 Million owner-occupied households, compared with a peak of 14.79 Million in 2005.

By contrast, the number of Private Rental Sector (PRS) households has dramatically increased to 3.62 Million, compared with 2.45 Million in 2005.

In 2010-11

  • 66% of households were owner occupiers
  • 17% were private renters
  • 17% were social tenants.

The biggest shift towards renting in 2010/11 was in the 16 to 34-year-old age group.

  • 36% of this age group were in owner occupation
  • 18% were social renters
  • 46% were renting privately.

When compared with 1991, 60% of this age group were owner occupiers and 18% were renting privately.

The average household size for all households was 2.3 people, with 29% of all households containing just one person.

Owner occupiers were richer than private tenants, but paid less on a mortgage than tenants did on rent. An owner-occupier household had an annual income of £40,900 (GBP) compared with £29,000 (GBP) for private tenants. Owner occupiers made average weekly mortgage payments of £143 (GBP), compared with average weekly rent of £160 (GBP).

On average, weekly mortgage payments were 19% of home owners’ income, while weekly rent payments were 43% of tenants’ income. Private tenants had the highest housing costs of all three groups – owner occupiers, private tenants and social tenants.

The English Housing Survey also noted a significant fall in the number of households with a mortgage, down from 8.3 Million in 1996-97 to 7.1 Million in 2010-11.

There has also been a major change in the type of mortgage: in 1996-97, 33% of mortgages were repayment loans, while in 2010-11 this had increased to 73%. Only 3% of mortgages were interest-only in 1996-97, but the proportion had increased to 13% in 2010-11.

The survey found that 59% of private tenants and 23% of social tenants expect to buy a residential property at some point, and 16% had considered buying a home in the previous 12 months.

However, there was not much confidence about UK property prices: in nearly every region other than London, a larger proportion of households thought their property value had decreased rather than increased in value over the previous year. Around 1% believed they were in negative equity.

Optimism among residential property owners is increasing with more than one third expecting residential property prices to be higher by this time next year, despite the uncertainty surrounding the UK housing market, according to the latest survey by Rightmove.

46% of homeowners regard current residential property values to be fair and reasonable according to the consumer confidence survey, showing that the British public now have a more optimistic outlook for the UK property market, than in recent years

Concerns stated by the public in the survey include

  • Mortgage-related issues
  • Mortgage availability
  • High deposits
  • Being able to find a suitable property

The survey of 40,000+ home movers showed that some 6% worried about being able to meet mortgage payments and the same proportion were also concerned about property values changing.

Despite the slump in the UK property market over the last three years, public home ownership ambitions remain undaunted by the UK’s double dip recession.

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